CATL Plans $2-billion IPO to Boost Lithium-ion Battery Production

The battery giant plans to raise the money by the end of June next year, and will use the funds to build two new lithium-ion battery plants.

ipo

China’s Contemporary Amperex Technology (CATL) plans to complete a $2-billion IPO to boost its lithium-ion battery production, the company said in a prospectus on Tuesday (November 14).

The battery giant aims to raise $1.97 billion through an IPO of 217 million new shares by the end of June next year, indicating a valuation of around $20 billion.

The company will use the funds to build two new battery plants, including a 24-GWh megafactory, to reach its target capacity of 50 GWh by 2020.

CATL hopes to compete for a share of the electric vehicle (EV) market, not only in China but around the world. Last year, it held 10.5 percent of the global EV battery market, behind only BYD (HKEX:1211) and Panasonic (TSE:6752), says BNP Paribas (EPA:BNP). Other competitors in the space include LG Chem (KRX:051910) and Tesla (NASDAQ:TSLA).

As demand for EVs continues to sour, the need for lithium-ion batteries is forecast to increase to 750 GWh by 2026. Companies will also need more of the raw materials used to make them — cobalt supply, for instance, will need to reach 180,000 tonnes in 2026 from 48,000 tonnes last year, according to Benchmark Mineral Intelligence.

For that reason, CATL has also been looking to secure supply of the metals used to make lithium-ion batteries. Last week, the company announced that is looking to invest in upstream companies.

“We are looking for all ways to collaborate with upstream and downstream, but obviously upstream is more difficult,” Hu Guoliang, assistant to the president and general manager for CATL’s global EV product line, told reporters in Guangzhou last week.

“The only problem is the upstream is so strong. It’s not in our hands,” Hu said, adding that there may have to be more than one set of negotiations to reach an agreement.

Several analysts believe deals between manufacturers and upstream companies will become more common in the near future. Earlier this year, Pilbara Minerals (ASX:PLS) signed a lithium offtake deal, the first of this kind, with Chinese automaker Great Wall Motors (HKEX:2333).

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

 

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